I've reread this thread several times, and it seems the more I read it, the more I find things that I missed.
So it seems like the entire exhibet is inside glass cases. I expected some things to be hung on walls or shelves. Still, I would recommend having a binder on display, with pages on characters, biographies, and classic moments.
Since you're making some 3-D models/replicas, have you thought about making a Cecille? That shouldn't be too hard... Just roll some orange playdough into a ball, maybe paint some lipstick.
I was thinking about two things I would do if I were in charge, and maybe you did think about them (or are planning them). One thing I would do would be to display some posterboard dedicated to the first episode. Put some text paper in the middle, providing such information as "sponsors", original air date, and basic plot info, and on the sides of the posterboard, images (and text) of some of the episode's highlights, like Big Bird, Oscar, Ernie and Bert's first scenes, Jazz #2, Kermit's W lecture, the dots, and others, maybe list some of the best unpictured scenes in the main text. I wouldn't include photos from the baker films, since those will have representation by the clay sculpture of the baker, and I wouldn't list anything that is cut on DVD.
The other thing I would do would also invovle poster board and include mini-biographies on the main six performers from the early years (of course I'm referring to Henson, Oz, Nelson, Spinney, Brill, and Hunt), put in six columns, with photos of the performers on top and text on them below (and if there's any room left, images of some of their characters).
I was thinking it would be funny to put in a paper listing errors that appear in the reference books, maybe draw a word balloon over the text and put in a picture of Oscar. Might be too mean, though (I wouldn't want the exhibet to make people reconsider reading the reference books, though Muppet Wiki is the best reference tool).
Assuming that library has a copy of Old School: Volume 2, you should try to work in a reference to the sketch where Cookie Monster goes to the library... Maybe include info on that sketch and point out that that particular library also doesn't have any cookies.
Before posting this I noticed that you mentioned part of it will be online. That's good to know.